Reuters reports that there may be yet another bidder looking to take over Safeway Plc in the UK -- UK retail clothing magnate Philip Green, who reportedly has requested financial information from Safeway, may be prepared make a cash bid that is the equivalent of $4.7 billion (US).
Green joins a list that includes Wm. Morrison, which started the whole thing with the equivalent of a $4 billion bid for Safeway, followed by a $5.15 billion cash-and-stock bid from Sainsbury, a $4.8 billion cash bid from Wal-Mart, and what appears to be a likely bid from Kohlberg Kravis Roberts & Co (KKR), the American private equity firm.
The conventional wisdom seems to be that Sainsbury and Wal-Mart will run into regulatory problems because of competitive issues that Morrison won’t face. The KKR bid is intriguing, because of the likelihood that if it prevails, the company will end up selling off the chain in pieces…which means that virtually everybody could send up with some stores, including market leader Tesco, which has expressed some interest in Safeway’s c-stores.
According to PlanetRetail.net this morning, Waitrose has asked the Office of Fair Trading (OFT) to stop Sainsbury and Asda from bidding for Safeway, saying that “the proposed takeover of Safeway raises major concerns about the increased concentration of market power of companies bidding for its acquisition. In our view, competition is not just about having four or five large food retailers. A homogenised market will curtail choice and quality and would not be in the interests of customers, farmers or suppliers."
Waitrose conceded that it would be interested in buying a "significant number" of shops should they become available.
Green joins a list that includes Wm. Morrison, which started the whole thing with the equivalent of a $4 billion bid for Safeway, followed by a $5.15 billion cash-and-stock bid from Sainsbury, a $4.8 billion cash bid from Wal-Mart, and what appears to be a likely bid from Kohlberg Kravis Roberts & Co (KKR), the American private equity firm.
The conventional wisdom seems to be that Sainsbury and Wal-Mart will run into regulatory problems because of competitive issues that Morrison won’t face. The KKR bid is intriguing, because of the likelihood that if it prevails, the company will end up selling off the chain in pieces…which means that virtually everybody could send up with some stores, including market leader Tesco, which has expressed some interest in Safeway’s c-stores.
According to PlanetRetail.net this morning, Waitrose has asked the Office of Fair Trading (OFT) to stop Sainsbury and Asda from bidding for Safeway, saying that “the proposed takeover of Safeway raises major concerns about the increased concentration of market power of companies bidding for its acquisition. In our view, competition is not just about having four or five large food retailers. A homogenised market will curtail choice and quality and would not be in the interests of customers, farmers or suppliers."
Waitrose conceded that it would be interested in buying a "significant number" of shops should they become available.
- KC's View:
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Seems likely that there probably will be additional bidders, and that this story has only just begin to unfold.
It’s interesting…the Associated Press ran a piece of the weekend that referred to the supermarket competition in the US as a kind of business Darwinism, in which the “survival of the fittest” in which every player -- big and small, niche and mainstream -- engages in a brutal battle to see which ones can outlast the others (and Wal-Mart).
Seems to us that the same sort of battle is taking place on the business battlefields of the UK, except there’s a difference. In the US, the consumer can be perceived as being at least a short-term beneficiary of all the mayhem because prices tend to come down and, hopefully, chains get more creative and innovative as they struggle to survive. We’re not sure that this will be the result of all the chaos in the UK, because centralized power doesn’t necessarily add up to benefits for the consumer.
And when the consumer loses, eventually, we think, the food industry loses.
